Tesla Motors delivers first profit and plans to invest $200m

Posted on 10 May 2013 by Tim Brown

Electric car manufacturer Tesla Motors has reported its first quarterly profit, demonstrating a growing interest in low carbon performance vehicles in the US.

Tesla Motors, which was established in 2003, this week reported earnings of $15 million (£9.6 million) in its first quarter, having delivered nearly 5,000 Model S electric cars during the first three months of the year.

Company chairman and CEO, Elon Musk, said Tesla expects to deliver 21,000 Model S cars worldwide, an increase of 5% from its earlier target of 20,000. Eventually, global demand for its Model S electric car may surpass 30,000 vehicles a year, the company said.

“There’s potential for next year a fairly significant increase in volume as we really test the depth of the demand that’s out there,” Mr Musk said.“It’s probably quite a bit higher than we had originally thought.”

In its letter to shareholders, the company said it plans to spend about $200m on capital expenditures in 2013. Chief financial officer, Deepak Ahuja, said that these investments will assist to increase the company’s profit margin furhter.

“Some of the capital expenditure [planned] is related to improvements we are making in-house by bringing more equipment in and automating our processes which will result in gross margin improvements. A portion of [the investment] will also go to new product development and another portion will be the infrastructure development of our service centres, our stores, and the supercharger network.”

The first-quarter results sent Tesla shares up 24% to $69.40 on the NASDAQ as of the close of trading on Thursday.

A Model S equipped with a 60 kilowatt battery starts at around $70,000 before a $7,500 tax credit.

Tesla’s profit contrasts with other green car startups that have struggled over the past year, particularly its luxury rival Fisker, which makes the Karma plug-in hybrid.

Fisker and Tesla received low-interest loans under a US Department of Energy program designed to promote advanced vehicle development. However, according to The Times newspaper, while Tesla built 400 or more cars a week during the first quarter, Fisker has not built a car since last July. Fisker has also fired most of its workforce, hired bankruptcy advisors and missed a payment on its loan.